World's largest pork produce sets record income, profits

WH Group, the world's largest pork producer, has benefited from growing synergies between its China operation and the Smithfield Foods it acquired in fall 2013.

The $4.7 billion takeover has been the largest purchase of a US company by Chinese investors, becoming a case study for business schools.

In little more than a year, the WH Group, formerly known as Shuanghui International, saw its market share expand, along with record profits from China and the US, with net profits jumping 88.6 percent to $956 million in fiscal year 2014.

WH Group Chairman and CEO Wan Long described 2014 as a fruitful year for the company. The group was listed on the Hong Kong Stock Exchange in 2014, and recorded stellar performance in each of its business segments.

Wan said in a press release in March 2015 that the full-scale integration of WH Group's China operations and Smithfield Foods progressed smoothly in the past year, with synergies between operations in China and the US gradually emerging.

"Going forward, we will continue to sustain and consolidate our industry-leading position as the world's largest pork company under the guidance of our corporate development strategy, to develop resources worldwide to drive our global expansion and provide more quality meat products for consumers around the world," said Wan, who is in his mid 70s and regarded by many as a legend in China's pork industry.

WH Group's sales reached $22.24 billion in 2014, an increase of 97.7 percent from the previous year. This included $15 billion in sales from Smithfield Foods, an 8 percent increase over the previous year, according to 2014 reports by both WH Group and Smithfield Foods.

A Smithfield Foods spokesman told China Daily in late July that Smithfield is very pleased with the continued progress in collaboration with WH Group and its sister company, Shuanghui, based in Central China's Henan province.

After the 2013 acquisition, the WH Group retained Smithfield's management team in the US, and Larry Pope, who first joined Smithfield Foods in 1980, continues to serve as president and CEO.

Despite doubts cast by some about the possible effect of the WH Group acquisition, Pope told a meeting of local residents of the company's headquarters, Smithfield, Virginia, in June 2015 that the acquisition has netted only positive results for the company and the town.

In 2014, Smithfield Foods set records in sales and net income: more than $15 billion and more than $550 million, respectively.

"Our brands are absolutely on fire," Pope said.

Pope, quoted by the local newspaper the Daily Press, described Smithfield Foods as being "the same old Smithfield, but better" since the takeover.

The spokesman, who prefers only to be identified as "the company," was delighted that Smithfield achieved record results in the first year after the WH Group acquisition, with volume, market share and distribution gains across many key brands and product categories.

"Our record earnings underscore Smithfield's evolution into a branded packaged meats company," the spokesman said.

The Smithfield spokesman, who asked not to be identified by name, said the company was delighted that Smithfield achieved record results in the first year after the WH Group acquisition, with volume, market share and distribution gains across many key brands and product categories.

While crediting much of the success to Smithfield's strengthening marketing and brand-building efforts and maximizing its manufacturing platform, Smithfield's most exciting growth prospect is the continuing development of its packaged meats business, which holds great potential, according to the spokesman.

Smithfield Foods also expanded further into China after the acquisition. Smithfield-branded kiosks in the Chinese mainland are selling chilled fresh pork produced by Smithfield Foods in the US.

Smithfield has been working closely with its sister company, Shuanghui, to improve operational and financial practices, technology and market knowledge.

"And we hope these efforts will contribute to China's overall policy goal to raise standards in the agricultural and meat production industries," the spokesman said.

chenweihua@chinadailyusa.com